Predicting hospital choice for rural Medicare beneficiaries: the role of severity of illness

Abstract

Previous research has confirmed that desirable hospital attributes as well as increased distance, or travel time, have an impact on hospital choice. These studies have become increasingly sophisticated in modeling choice. This study adds to the existing literature by estimating the effect of both hospital and individual characteristics on hospital choice, using McFadden's conditional logit model. Some patient characteristics have not previously been accounted for in this type of analysis. In particular, the effect of a patient's complexity of illness (as measured by Disease Staging) on the choice of hospital is taken into account. The data consist of over 12,000 Medicare discharges in three overlapping rural market areas during 1986. The hospital choice set was aggregated into seven groups of urban and rural hospitals. Results indicate that rural Medicare beneficiaries tend to choose hospitals with a large scope of service and with teaching activity over those with a lower scope of service and no teaching activity, holding other factors constant. Distance is a deterrent to hospital choice, especially for older Medicare beneficiaries. The more complex cases tend to choose larger urban and rural hospitals over small rural hospitals more often than less complex cases do.